Tesla stock (TSLA) jumped more than 10% on Tuesday after the electric vehicle giant reported quarterly vehicle deliveries that beat Wall Street expectations.
The EV maker delivered 443,956 vehicles during the second quarter, versus an analyst consensus estimate of 439,302, per Bloomberg data.
“In the second quarter, we produced approximately 411,000 vehicles and delivered approximately 444,000 vehicles,” read a company statement. Broken down by car type, Tesla said it delivered 422,405 models 3/Y and 21,551 other models.
Tesla EVs were mission impossible according to the experts and when they took off the stock exploded twenty fold (2019-22) before giving back a lot (about 75%), not all that unusual for growth stocks.
I believe the explosive growth stage for Tesla EVs is over. A major driver was Tesla’s focus on production efficiency, the machine that builds the machine, the 21st century version of Ford’s, 20th century assembly line.
While Ford remained a manufacturing company, Tesla is graduating from EVs to artificial intelligence using the EV cash flow to finance the progression. Elon Musk said as much when he said that if you don’t believe in FSD, RoboTaxis, and the Optimus robot you should not be investing in Tesla!
This is the Tesla Musk is selling to Wall Street, and he’s telling anyone with doubts to stay away.
“If somebody doesn’t believe Tesla’s going to solve autonomy, I think they should not be an investor in the company,” Musk said on the earnings call. He added, “We will, and we are.”
I believe there is sufficient evidence that AI has finally Crossed Chasm at the ripe old age of 68.
The Conference that Started it All
Five years later, the proof of concept was initialized through Allen Newell, Cliff Shaw, and Herbert Simon’s, Logic Theorist. The Logic Theorist was a program designed to mimic the problem solving skills of a human and was funded by Research and Development (RAND) Corporation. It’s considered by many to be the first artificial intelligence program and was presented at the Dartmouth Summer Research Project on Artificial Intelligence (DSRPAI) hosted by John McCarthy and Marvin Minsky in 1956.
Until recently the technology to implement functional AI did not exist, heuristics could not do it. Quants, The Rocket Scientists of Wall Street, could not do it. The mood got so grim that AI was declared dead. It took neural networks mimicking how the brain works to make AI a reality. By 2024 the hardware and the software were in place to make it happen.
While neural networks are a brilliant breakthrough the truth is that neural networks rely on brute force like most everything in the universe. As much data as you can possibly collect and the most powerful data centers you can afford to build. This is where Tesla’s EV free cash flow gives the company an edge.
The other edge of the two sided sword are the products (hardware) Tesla has (or will have) to monetize the AI, autonomous mobility and humanoid robots.
As the market catches on we should see a second coming of the TSLA stock to rival 2019-22.
Does this mean that no existing Tesla will ever be capable of lvl 5 FSD? Certainly reads that way.
Although the initial plans were to turn existing Tesla EVs into robotaxis with a software switch, this option has not been mentioned in the latest updates Tesla offered on vehicle autonomy. In a recent tweet, Elon Musk hints that this might not be possible at all, at least for older vehicles with Hardware 3 Autopilot computers.
… Simply put, future iterations of FSD software would have to analyze a lot more aspects of every driving scenario. Given the computing power required, current Autopilot computers would run into bottlenecks.
… Tesla might have to admit that even a Hardware 4 computer won’t be enough for [full autonomy].
I wonder if that also then means that we will face a Windows 10 scenario* where the software is no longer supported or updated.
Doubtful. I assume there are laws for safety and the recall process that would require some support for at least some number of years (8 or 10 maybe). That doesn’t mean that they have to keep providing new and updated features, but certainly provide OTA updates for safety issues. There are no laws, that I know of, that require computer OSes to be supported in any way for some number of years.
When I bought my M3 in 2018 they did say I’d get updates for self driving, but there was no mention of making it into a robotaxi. And although Musk has talked about this I don’t know if it was in any language in a purchase contract.
Recalls deal with defects in core systems. They are not required, to my knowledge, for optional software purchases.
In other words, you are not required to subscribe to a FSD package to own a Tesla - so Tesla is not obligated to support that optional package any longer than they wish (or whatever the contract states).
Meanwhile, while in San Francisco on vacation recently, saw the Waymo robotaxi running all the time on the city streets with nobody in the front seats…
Sure you are not required to subscribe to FSD. But if FSD was found to have a safety defect (like the wrong font size for an error message) wouldn’t they have to fix this? or disable the feature?
I guess, but that is not the sort of update for which I was referring. If FSD requires better hardware to run, then much like Microsoft Windows, I wonder if there will come a day where certain model years of cars will simply not be able to be updated (or where the company will refuse to update them). In those cases, the owner will likely be faced with the choice of continuing to pay for the software (as Musk stated, it will still be very good), or cancelling the subscription. I doubt the law requires that Tesla retroactively fix all prior Hardware iterations for an optional subscription service.
Tesla has started delivering new Tesla vehicles equipped with HW4 in early 2023, starting with its flagship models, the Model S and Model X. According to some owners who took delivery of their new EVs, their vehicles have HW4 installed and confirmed by Tesla’s internal systems.
I wonder how many remote operators they have? They don’t directly control the cars, but do give them hints when they are stuck and don’t know what to do.
(I think all robotaxis will have these)
It’s a real testament to Musk’s genius that he got about 300,000 customers in North America to pay that kind of money to be software beta testers. {{ LOL }}
When it’s in wide use, I suspect you’ll have one remote human operator for maybe 30 robo-taxis to start, depending on how many times per shift a robo-taxi gets “stuck”.
Odder still that multiple other companies already have FSD and Robotaxis running the streets, and Tesla says now a hardware upgrade to a new central “Hardware 4” will be necessary, so if you have an older car, TSFY.
I remember being told that every Tesla will be able to take advantage of FSD once it comes, but apparently that was just a lot of fanbois talk and it is (once again) proving harder than many people thought.
The fact that others are already dong it proves it can be done, but those betting on Tesla might be right - or not - as the already successful ones are using other hardware configurations which Tesla has specifically taken out of the chain (notably, LIDAR, which adds costs.)
Anyway, it’s coming, but I see no assurance that Tesla will somehow own the space. Possible, of course, just speculative at best.
Depends on the wording used in the sales agreement for the software when purchased. If the limitation is based on the hardware in the original vehicle, and it does not say if/how it will be upgraded if needed, then the customer is essentially stuck with a $15k floppy disk. If the customer is allowed to transfer the FSD software license to a new Tesla vehicle (based on having already paid for the software), then it becomes a way to lock in future sales for years to come.
No existing Tesla on the road today (except perhaps the Cybertruck) could ever be fully autonomous. This is for a very simple reason. It CANNOT see directly in front of itself. That means that it will never be able to pull out of my driveway on its own. There could be a toy or a bike on the driveway right in front of it. There could be a little kid sitting and playing in the driveway right in front of it.
Models with a future version of hardware will include a front bumper camera which will then alleviate this issue.
I have long held the hardware was not enough to do this. Not nearly.
It is easy to put up a drawing board of Hardware 4, Hardware 5, Hardware 6…etc…but even then these guys are trying to guess. Which is a really bad omen.
Musk has a dream. A set of dreams if you include the companies around AI he wants powered up. He has the market capitalization of a few companies.
Tesla has a couple of times offered to transfer FSD from your current car to a new one in the last year, usually near the end of a quarter…to bump up sales.
When I got my 2018 M3 it came with HW 2.5 and they said I would get an upgrade to HW3 which they did about 18-24 months later (I delayed a bit from when it was offered due to COVID). There was nothing in the deal about a robotaxi or any specific “level” of autonomy.
